JPMorgan Chase Institute Data Show That as Unemployment Decreases, So
Does Growth in Participation in the Online Platform Economy

More than 50 percent of people earning in the online platform economy
leave their online gigs within one year

November 15, 2016 09:00 AM Eastern Standard Time

WASHINGTON--(BUSINESS WIRE)--The JPMorgan Chase Institute issued a new report today showing that
participation in the online platform economy – where people are paid for
online gigs like driving services, selling goods, or renting their homes
– continues to grow, but has slowed significantly since its peak in
2014. At the same time there is a high degree of turnover in the online
platform economy, as one in six participants are new each month and more
than half exit within 12 months.

The
Online Platform Economy: Has Growth Peaked? also provides a
unique look at the growth in participation in and earnings from the
online platform economy in 15 major U.S. cities: Atlanta, Chicago,
Columbus, Dallas, Denver, Detroit, Houston, Los Angeles, Miami, New
York, Phoenix, San Diego, San Francisco, San Jose and Seattle.

“The online platform economy continues to grow but the pace of growth
has slowed dramatically,” said Diana Farrell, President and CEO,
JPMorgan Chase Institute. “As unemployment falls and more people
gain traditional jobs, they are less likely to participate in the online
platform economy and more likely to exit.”

The report was constructed using anonymized account data from October
2012 to June 2016 on more than 240,000 core Chase customers. All of
these individuals received income at least once during this time frame
from one or more of 42 different platforms.

Following are key findings from the new report:

Growth in participation in the Online Platform Economy peaked in
2014 and has slowed since then.

Cumulatively, 4.3 percent of adults earned income from the
platform economy as of June 2016—1.5 percent from labor platforms
and 2.8 percent from capital platforms.

As of June 2016, participation in capital platforms exhibited no
year-over-year growth, but participation in labor platforms
roughly doubled year-over-year.

Turnover in the Online Platform Economy is high: one in six
participants in any given month is new, and more than half of
participants exit within 12 months.

More than one-third of capital platform participants earned
platform income for just one month compared to 17 percent of labor
platform participants.

Non-employed individuals are more likely than the employed to
participate in labor platforms but represent a decreasing share of
participants as the unemployment rate drops.

The fraction of labor platform participants with a job outside the
online platform economy increased from a low of 24 percent in
January 2013 to 51 percent in June 2016 while the official
unemployment rate fell from 8.0 percent to 4.9 percent over the
same period.

As of June 2016, 49 percent of labor platform participants and 39
percent of capital platform participants were not otherwise
employed.

Platform earnings and participation differ significantly across
cities. While monthly earnings on capital platforms increased by 34
percent between June 2014 and June 2016, they decreased on labor
platforms by 6 percent (a trend that coincides with wage cuts by
some platforms.)

In June 2016, average monthly labor platform earnings ranged from
$2,447 in New York to $585 in Miami.

In June 2016, average monthly capital platform earnings ranged
from $2,245 in Miami to $507 in Columbus.

At the city level, there is substantial variation in labor
platform participation.

In June 2016, participation on labor platforms ranged from 1.2
percent of adults in San Francisco to 0.2 percent in Detroit.

New York experienced the fastest growth in participation—a 236
percent increase year-over-year—while San Francisco experienced
the slowest rate of growth at 26 percent year-over-year.

Employed, higher-income, and younger participants are more likely
to exit the Online Platform Economy within a year. There was wide
dispersion in dropout rates across cities on labor platforms but
little variation in dropout on capital platforms.

On labor platforms, the percent of people who drop out of labor
platforms within 12 months ranged from 69 percent in Detroit to 45
percent in San Francisco.

The JPMorgan Chase Institute is a global think tank dedicated to
delivering data-rich analyses and expert insights for the public good.
Its aim is to help decision makers – policymakers, businesses, and
nonprofit leaders – appreciate the scale, granularity, diversity, and
interconnectedness of the global economic system and use better facts,
timely data, and thoughtful analysis to make smarter decisions to
advance global prosperity. Drawing on JPMorgan Chase & Co.’s unique
proprietary data, expertise, and market access, the Institute develops
analyses and insights on the inner workings of the global economy,
frames critical problems, and convenes stakeholders and leading
thinkers. For more information visit: jpmorganchaseinstitute.com.